Arizona state audit reveals millions in uncollected revenue at Arizona State School for the Deaf and Blind

Families connected to the Arizona State Schools for the Deaf and the Blind are facing new questions about how the state agency managed money, student records and major operational decisions during a period of upheaval. A state audit found that ASDB failed to collect millions of dollars it may have been entitled to receive, made payments that could require refunds and maintained financial and enrollment systems that auditors said needed significant improvement. The findings matter to families who depend on the agency for consistent educational services and clear communication about their children’s schooling.

The Arizona Auditor General examined ASDB’s operations from 2022 through 2024 through a forensic and performance audit. Investigators reviewed financial information, student documentation and other agency records. Their review did not find evidence of fraud or criminal conduct, but it did identify failures in oversight and financial management that potentially cost the school millions of dollars. The audit’s concerns extended beyond accounting, reaching enrollment procedures, billing practices, staff background checks and the way ASDB handled a major campus relocation.

The largest financial issue involved revenue the agency did not collect. Auditors found that ASDB failed to obtain more than $2 million in money connected to vouchers and services. The agency also left approximately $2.5 million in potentially recoverable Medicaid claims uncollected. Together, those figures represent more than $4.5 million in revenue that might have supported ASDB’s operations, although the audit described the Medicaid amount as potentially recoverable rather than guaranteed funding.

The audit also identified payments that may have to be returned. ASDB officials estimated that nearly $456,000 could be subject to refunds because payments were duplicated, exceeded allowable amounts or lacked sufficient supporting documentation. The findings indicate that the agency’s problems were not limited to money it failed to bring in. Its procedures for approving, documenting and tracking outgoing payments also created the possibility that public funds had been distributed incorrectly.

Those financial findings came as ASDB was dealing with a $2.6 million budget deficit and closing its Westside Campus. Students were moved to the new Copper Creek Campus, a decision that auditors said was not handled with enough transparency. The agency also did not adequately evaluate how the relocation would affect students. For families, the move represented more than a change in address. It altered the setting around which students’ education and daily routines had been organized, while the audit raised questions about whether ASDB sufficiently considered those consequences before proceeding.

The campus change has also become the subject of a lawsuit filed by the Arizona Department of Education. The department alleges that ASDB violated special education law involving blind and visually impaired students. The legal action adds another layer of scrutiny to the relocation and to the agency’s decision making. The audit did not establish criminal wrongdoing, but its conclusions and the lawsuit together point to continuing concerns about how ASDB plans and communicates changes affecting students.

Liza Smith, president of the ASDB Parent Student Organization, said families have had difficulty getting answers from school leaders about recent changes. She described a decline in communication and said other families had reported similar experiences. In her own case, she said she did not know her daughter’s homeroom teacher and learned that information from her daughter instead of directly from the school. Smith’s concerns reflect the practical effect of weak communication: Families may struggle to understand who is responsible for their children’s education, how programs are changing and what support students will receive.

The Auditor General issued 75 recommendations for ASDB. They call for stronger staff background check procedures, corrections to student enrollment and billing systems, better financial controls and greater openness when the agency makes major institutional decisions. These recommendations are intended to address both the specific problems found in the audit and the systems that allowed those problems to continue. Improving enrollment records and billing could help the agency claim money it has earned, while stronger payment controls could reduce the risk of duplicate, excessive or unsupported disbursements.

ASDB said the audits found no evidence of fraud or intentional wrongdoing and that it would continue meeting its legal responsibilities as a state agency. The school acknowledged the financial management problems identified in the audit and said it is developing new systems to prevent similar losses. The agency did not directly answer questions about its finances, according to the report, but indicated that it would make appropriate policy changes to address the findings. The Auditor General’s office plans to check on ASDB’s progress within six months, giving families and state officials a near term opportunity to see whether the agency has begun implementing the recommended reforms.